‘Start Delivering’: Investors Losing Patience With Weatherford

Oilfield services company Weatherford’s long-touted financial turnaround was supposed to be well underway at the start of 2014, but now it has been forced to retract previous rosy projections.

On Thursday Weatherford warned its fourth-quarter profits, originally estimated between 27 and 29 cents a share, would come in 75% lower, between 5 and 8 cents a share, when it reports on February 26. The market was understandably perturbed and the stock price promptly dropped more than 4% on the news to around $13.25.

Three months ago, the company that competes with Halliburton and Schlumberger had more believers. The stock climbed steadily by more than 50% in 2013, peaking at $17.37 a share in early November, as Chief Executive Bernard Duroc-Danner touted major changes, including cleaning up an accounting errors that had dogged the company’s results for years. The company is paying the U.S. government $253 million to clear itself of bribery and trade sanction investigations, and Mr. Duroc-Danner promised the firm would get its accounting in order and raise cash by selling off some business lines.

But analysts at Houston investment bank Tudor Pickering Holt & Co. are losing patience with the company’s inability to meet its own expectations. “We’ve grown rather weary of WFT’s recurring litany of operational excuses” analyst Byron Pope said on Thursday. “So color us jaded as to WFT’s full year 2014 earnings per share guidance.”

Weatherford said Thursday that severe weather in some places, weak oil and gas activity in Latin America and disrupted operations in the Middle East were a drag during the fourth quarter, but added it expects to earn $1.10 to $1.20 per share in 2014. The company’s cost cutting efforts this year include laying off 7,000 employees, or about 10% of its workforce.

Barclays pointed to debt reduction and new contracts as positive moves for Weatherford, but other analysts said the company still hasn’t shown it can deliver results.

“The challenge is discerning what the earnings power of the enterprise is and what really the company is worth,” Simmons & Co. Managing Director Bill Herbert said. “They have to start delivering on earnings.”